An “All of the Above” Energy Policy Concedes the Future June 10, 2011

The dominant theme in President Obama’s 2011 State of the Union address was “winning the future”. As has become typical during Obama’s tenure in office, the speech and the metaphor selected seemed designed to avoid making a clear and decisive statement and to make peace with his Republican opponents. However if we take the President’s metaphor seriously, Obama’s energy policies seem more likely to continue conceding the future to other nations who are making real choices in the area of energy. Rather than take the initiative as he could as President, Obama has chosen in energy to make friends with almost every aspect of the energy industry, green and, in particular, brown.

Choosing “All of the Above”

The 2008 Energy flow diagram for the US (Lawrence Livermore National Laboratory) shows the dominance of fossil energy (bottom three flows) in the US energy use system. A transformation of this energy flow diagram towards sustainable sources of energy will be impossible without aggressive federal government policy

While I had hopes that President Obama would significantly change our approach to energy in favor of sustainable energy choices, as it turns out the best description for his approach would be that it is an “all of the above” energy policy. Not as aggressively retrograde as his predecessor, George W. Bush, Obama has tried to show that he is not only a reliable friend to the oil and gas lobbies but also is willing to “throw a bone to” the renewable energy industry and public transit supporters. He has made a cautious foray into high speed rail though not bold enough to insure that HSR has a secure funding base. His administration provided loan guarantees to large renewable energy projects that were already in the pipelines. He seems to treat energy and transport alternatives as, for the most part being representative of a larger political “constituency” which he courts by offering more or less support for their presumed favorite projects or ideas.

The problem with the apparent equivalence in this political strategy is that it ignores the real-world physical energy balance, the depletion curve of fossil energy, and emissions of US society as well as political and market power differences between these constituencies and industry segments. Oil, gas and coal companies are the dominant energy companies on the planet and have considerable power in Washington as well as beyond the Beltway in the real economy. In order for there to be actual equality between these different groups, if that is even a desirable outcome, government institutions would need to favor the “infant industries” of renewable energy and energy efficiency to compensate for years of subsidy and centuries of precedence in the energy and transport sectors for fossil energy. Our society has to an overwhelming degree been built around oil, gas and coal.

Another approach, that is not even on the table, would be, rather than play to one or the other constituency, to build an energy policy based on the real geological, geopolitical, environmental, and social factors that condition energy availability and energy use. Such a policy would favor renewable energy and energy efficiency but would also challenge these segments to radically scale up production and reduce emissions sooner rather than later. Furthermore only government policy can push the now not-inexpensive energies of the future down the cost curve.

Beyond trying to project the image of not playing favorites between industry segments, Obama seems to view energy very much in “Left-Right” terms. The 2009 stimulus package had some promising financing for renewable energy projects (optically “Left”) but these have not so far turned into a durable renewable energy support policy beyond the existing status quo. In March 2010, Obama announced plans to open new areas to offshore drilling, clearly an effort to blunt the “drill baby drill” mantra of the Republicans (optically “Right”). Natural gas drilling and fracking continues with the addition of a new drilling safety panel which seems to be an effort to address pro- and anti-fracking lobbies. Energy efficiency, the no-brainer energy solution, has been given some support but is not highlighted. An ultra-low energy retrofit of the White House, for instance, is inconceivable within Obama’s current political strategy because it would seem too “Left”, too hippy-ish.

The US High Speed Rail Association projects that its 2030 vision linking most US states by 200 mph high speed rail links would cost $600 Billion dollars. These rail lines would serve "Red" and "Blue" states alike. The relatively cautious approach of the Obama Administration focusing on a few projects does not communicate the potential of high speed and electric rail more generally: it functions as insulation against oil shocks in a nation extremely vulnerable to the price and availability of oil.

Of a piece with this picture is the level and type of support offered to, for instance, high speed rail projects. Obama “slipped in” $8 billion dollars for 11 high speed rail projects but which in itself would not buy a single high speed rail route on its own. While this was the single largest investment in high speed rail in the US, it pales in comparison with investments made by China,France or Spain in HSR or, for that matter, the comprehensive vision of the US High Speed Rail Association.

The lack of “bigness” in Obama’s support made it, I believe, much easier to attack from the Right. Not as many constituencies could be served by the smaller package to be divided between 11 projects. But more damaging, was the lack of a comprehensible vision for the American people about what HSR was about, as a sustainable alternative to regional air travel throughout the US. If Obama had presented a multi-year plan to fund any the USHSRA’s 2020 or 2030 vision, he might have had to fight more with Republicans but at the same time, there would be a greater understanding of the utility of having an HSR network rather than single lines that serve fewer constituencies. In an effort to avoid conflict, the point of the entire effort was not so easy to communicate and win political points or inspire hope.

In energy efficiency and energy conservation, which are together possibly the greenest energy measures, President Obama has introduced some programs that are “rational” but are also not world-leading in their ambition. The best publicized portions of his energy saving plans have been higher fuel efficiency standards for trucks and cars but these are not world-beating. He has introduced some sizeable tax incentives for electric vehicles. He announced an initiative to increase energy efficiency in commercial buildings 20% by 2020 which is better than before but by no means a “stretch” goal. Strategically these initiatives have gotten buried in the news cycle as the President appears to want to show himself as “not a liberal” which the Right wing associates with energy efficiency and conservation.

Climate Bill Hangover or Ideology?

Many of the energy and environmental initiatives and policy direction of the first year of the Obama Administration were packed in the ACESA climate bill that barely passed by the House of Representatives but which in a modified version stalled in the Senate. The lack of a filibuster-proof majority in the Senate made the passage of the even less ambitious Senate bill impossible. At the time, the dysfunction of the US Senate was held responsible by many commentators for its failure, though some noted that Obama was not campaigning heavily for either bill. The seeming diffidence of Obama in these matters was in retrospect striking, though the standard of comparison in 2009 was the backwards-looking Bush Administration, so by contrast Obama has been praised as the “greenest” President to date.

Without this omnibus bill, Obama’s energy policy has been pieced together and in a manner that indicates that the Obama Administration does not prioritize sustainable energy and climate concerns if they at all conflict with an inside-the-Beltway political calculus. Luckily the 2009 one-time stimulus package contained greener energy initiatives which continue to yield some benefits, including the HSR funding as well as renewable energy loan guarantees mentioned above. However within the Obama political strategy, the optically “Left” appearance of ambitious climate and energy action seems to outweigh any upside from real benefits to either the American economy or the global environment of more aggressive policies. At best, the Obama Administration is “stealthily” green where it will not be noticed by his Republican opponents; Obama seems unwilling to fight about the environment with his opponents who deny the potential of human beings to do harm to the natural world.

The recent offering of coal leases in Wyoming indicates that the Administration is also solidly behind the fossil fuel industries and shows little concern for climate impacts. We see, at least in this first term of the Obama Administration an “ideology” of trying to offend as few people as possible, court Republicans and right-leaning independents, and in the process putting the United States further behind in green energy and climate.

Paling in International Comparison

While the Obama Administration appears “green” in comparison to the Bush Administration, in energy policy, the US lags most European countries and is actually in many respects has a much weaker climate and energy policy than energy- and coal-hungry China, if the relatively privileged geographical position of the US is considered. Unlike many European countries and China, the US is not resource constrained when it comes to renewable energy sources and could theoretically build multiple “Renewable Electron Economies” using copious wind and solar resources. A conservative German government has just committed to doubling the share of electricity generated from renewable sources by 2020 and replacing its nuclear power plants with renewable energy. Denmark is pledging to go 100% renewable by 2050. China, while it continues to pursue an “all of the above” strategy, has been extremely aggressive in pursuing renewable energy and high speed rail.

Not Confronting the Cheap Energy Contract

A fitting explanation for the failings of US energy policy over at least the last three decades is the continued rule of the Cheap Energy Contract, a label I invented three years ago for a common concept in American politics. A mostly North American social contract, the Cheap Energy Contract is an implicit and explicit commitment by lawmakers in the US and as well as the energy industry itself, that the price of energy must be as cheap as possible in the near term. An adherence to the Cheap Energy Contract means that adding an energy tax of almost any kind is considered to be political suicide as well as any actions that could be construed as raising energy prices viewed from the perspective of a future political campaign.

President Obama’s apparent unwillingness to confront our fossil fuel energy habits and, moreover his tendency to encourage those habits in the short and medium term, could be viewed as efforts on his part to immunize himself from accusations that he “raised the price of gas” which could lead to election day fallout. But Obama is not alone in his adherence to the Contract, a current obsession of leftward portions of the political spectrum currently is the role of speculators in the high price of gasoline at the moment. Bernie Sanders, a reliable voice on the Left for many issues, is very loud in his protests about the role of speculators in raising the price of gas, hurting his mostly rural constituents. In these discussions, the positive role of an ascending carbon or gasoline tax in weaning America off petroleum is not often mentioned. Obama in this regard is not exceptional but also not assuming a leadership role in energy at a critical period in our history.

Effective Energy Policy is a “Do or Die” Component for a Sustainable Future

While talk of “energy markets” is common, what is often overlooked is that these energy markets are in part artificial constructs, co-created by years and decades of energy and infrastructure policy by government. Individual private or sometimes public enterprises may discover or develop a certain energy resource but soon the interconnected nature of how energy is used and produced creates the need for government to create rules and/or provide infrastructure so that energy can be used to the extent and at a price that consumers and businesses demand, while keeping in check monopolistic and oligopolistic excesses via regulation. Even in market economies, there is more and less planning to be found in energy policy and energy infrastructure, depending on the country.

Against those who hold up the chimera of a completely “free” market, planning by governments is critical for a sound energy policy to emerge. A lot of this has to do with the fact that energy consumers, when they are using energy, could generally “care less” about how that energy is produced, unless they are participating in a large-scale national or international “mission” related to energy. If energy is treated as simply a unit of “utility” by the consumer, the sustainability or non-sustainability of the source of energy is ignored. While some of the products (motion, heat) and byproducts (pollutants, fire) of energy use are sensible by people, the energy itself cannot be sensed. Government policy is under most conceivable conditions the means via which a framework of meaning and measurement can be constructed around energy. Therefore we rely most on government policy to make distinctions between energy sources.

Energy Policy as a “Funnel” to the Future

Obama’s “all of the above” energy policy, keeps us beholden to the “care less” or “lazy’ reliance on whatever energy source is least expensive or convenient at one moment in time or another. If we continue to pursue energy opportunistically, like for instance, fully exploit the tar sands of Alberta, and fail to institute a significant and rising carbon tax, we will be unable to build the energy future, or at least others will end up building it and leaving us behind.

Rather than “go every which way” in our search for and use of energy, seeking out and consuming “joules’ in whatever form we may find them, government policy needs to focus energy users on sustainable options, functioning as a “funnel”. One might think of there being two forces in a policy funnel, positive and negative forces. A positive force “draws” people towards new sources via incentives or provision of sustainable alternatives. A negative force, the “sides” of a the funnel, redirects behavior away from harmful uses of energy, either in the form of a prohibition or a price placed on dirty energy. The ability to say “no” with sufficient political legitimacy is key to the creation of an effective energy policy, as is the provision of adequate positive choices that have low social and environmental external costs.

So far, though President Obama seems intellectually aware of many of the dimensions of the problem in some of his speeches, he has not fought for a “funnel-like” energy policy, instead reinforcing the status quo, out of what appears to be fear of his political opponents. The politically safe focus on “more innovation” avoids the issue of pushing for policies that deploys the solutions that we already have that can get us a long way to where we need to go. While this seems to be part of a larger political and economic worldview that unfortunately the President either believes or implicitly accepts as true, energy policy is I believe a critical component for Obama to become a transformational President. Even if he does not, from the point of view of character, want to be a transformational figure, the real challenges of our society require our leaders to step into this role anyway.

I realize that funnels are not the most attractive concept as applied to human behavior; I invite others to come up with better or more attractive ideas. I would still caution that one critical component of any effective energy policy or policy metaphor is the introduction of reasonable constraints on human energy-using behavior. The advocacy of these constraints will always provoke attacks from people operating under a quixotic vision of freedom that has no physical supports or characteristics. For us to maintain our real freedoms, we must refrain from using up all fossil fuels, starting very soon indeed.

In subsequent posts, I will outline what this policy “funnel” might look like, even though it may fall on deaf ears in Washington.